Can I take benefit of India-UAE DTAA?
—Name withheld on request The Finance Act 2020 brought about some changes in tax laws for Indian citizens residing abroad. Two important changes that refer to the threshold of ₹15 lakh relate to (a) Indian citizens visiting India; and (b) Indian citizens not paying taxes anywhere across the world, respectively.
The first change lowered the threshold for Indian citizens staying outside India and coming to India on a visit, to qualify as non-residents, if their Indian income exceeds ₹15 lakh. The second change targets Indian citizens earning more than ₹15 lakh from Indian sources while residing in countries where they have no income tax liability.If you qualify as a tax resident of the foreign country, upon application, the tax authority of that nation would usually issue a Tax Residency Certificate (TRC) quoting the respective DTAA (Double Taxation Avoidance Agreement).
In your case, since you have obtained TRC from the UAE tax authorities, it is presumed that you are eligible to access India-UAE DTAA benefits. The provisions of the DTAA override provisions of domestic tax laws to the extent of inconsistency.Because of the Finance Act 2020 amendments, if you become a resident under the Indian tax law, you may apply the tie-breaker tests provided under the India-UAE DTAA to determine the treaty residence in your case.
The tie-breaker tests are a series of chronological tests that need to be run in order to break the tie in favour of one of the two countries, both of which claim tax residence under its domestic tax laws for the subject person. The sequence of tests is as follows: (1) possession of permanent home in the country; (2) country where your personal and economic relations are closer; (3) country in which you have
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